“If I would term it, slightly better than expected. I am happy to say that because at the beginning of the Q2 session there was a lot of pessimism, but the numbers have come out slightly better than what people were expecting. So overall, I am more positive on the earnings outlook now,” Maheshwari noted.
BFSI Sector Holds Strong
Among sectors, banking and financial services (BFSI) stood out. Despite concerns over negative net interest margins (NIMs) due to recent interest rate cuts, most banks managed to maintain slightly positive NIMs. “The numbers were better than expected. We were expecting that the NIMs for most of the banks were going to be negative, but still most banks were able to show a slightly positive NIM. With a strong consumption quarter ongoing and the busy Q4 season ahead, BFSI is really holding out, and valuations remain very comfortable,” he said.
Tata Motors: A Mixed Picture
The performance of Tata Motors presents a nuanced story. While the company’s electric vehicle (EV) segment is positioned positively as an India-dedicated business, challenges remain for passenger vehicles (PVs), primarily driven by Jaguar Land Rover (JLR). “Till we get the US and China problems sorted out as far as JLR is concerned, I do not think domestic sales will be of much consequence. The domestic quarter is going to be good for now, but the JLR issue continues. I would avoid PVs, but commercial vehicles (CVs) are in a good position at this point of time,” Maheshwari explained. Global demand dynamics also pose a concern. China’s rising EV capabilities and competition in major markets like the US could impact JLR’s medium-to-long-term outlook. “Competition is immense, and we need to consider R&D spend and tariff issues in the US. Until this gets sorted, PVs are avoid,” he cautioned.
IT Sector: Currency Tailwinds, But Challenges Ahead
IT companies, initially viewed with caution, showed resilience during Q2 thanks to currency tailwinds. However, Maheshwari warned of potential challenges in Q3, particularly if the dollar weakens.
“This quarter is going to be affected due to furloughs, so you may miss the same kind of numbers. There isn’t strong visibility yet for a rebound. That said, valuations have become more attractive for large caps, and midcaps offer some bright spots,” he noted.
As Q2 earnings close, the market faces a delicate balance: pockets of strength in BFSI and commercial vehicles, tempered by global uncertainties in automotive and IT sectors. Investors are advised to focus selectively while keeping an eye on evolving macro and sector-specific factors.
